Benefits of API’s to Banking
An application and programming interface (API) is used as a communication channel between online banking systems and third parties. For example, a financial service provider can obtain specific data about a particular user from his bank account using an API. Of course, a banking API can only do this with the customer’s consent.
The main advantage of API in a generation where time is money, is the elimination of redundant procedures in terms of verifying the identities of new customers. In short, the technology allows independent third-party financial service providers to move faster and easier. A successful online banking login is all that will be needed. An easy example is credit scoring, which can be done within seconds since data can be expediently accessed from a client’s bank account through the API.
While API’s are made with a variety of target solutions and uses, they are generally divided into four areas: plug and play; core banking; cards, wallets and transfers; and acquiring.
A good number of the banks and financial institutions today have been around for more than a hundred years, yet they are up-to-date with modern technology. To make this a reality, API’s helped them.
With the rise of digital portals, it is now possible to conduct lending and investing transactions online. And of course, behind these portals are API’s that facilitate the retrieval and updating of information from an entire range of databases. These same portals also depend on API’s for helping clients with their needs, such as finding accessible locations or exchanging currencies.
Peer-to-peer payment transfer programs are gaining ground, especially among younger people who have a preference for cashless payments. With bank accounts being linked to such platforms through API’s, financial institutions are able to increase customer satisfaction. Wtiht he mounting pressure banks and other financial face from fintech and alternative providers, many organizations are now using advanced analytics to serve their customers better. For instance, they may adopt fraud analytics solutions for more efficient theft detection, and the same technology can also be used to predict future needs of current customers. Advanced analytical procedures of this kind count on API’s in collecting data from multiple sources and databases.
Even as most banks are already using APIs for their internal information flow, many of the are still trying to figure out how to merge functionality from business partners. However, API’s can strategically offer innovation and functionality to the business by increasing their data and systems’ accessibility to third parties, and also by developing new revenue opportunities for the two.